Japan ready to intervene again on strong yen

TOKYO — Japan on Friday voiced concern over the rise of the yen to fresh 15-year highs against the dollar and signalled it was ready to wade back into markets to intervene amid fears of a global devaluation battle.

“I am very concerned about the current situation,” Prime Minister Naoto Kan told parliament when asked about the yen’s strength, which puts Japan’s growth-driving exporters at a disadvantage by making their products more expensive overseas.

“We will take decisive steps when necessary, from the perspective of curbing excessive fluctuations in exchange rates,” Finance Minister Yoshihiko Noda told a regular press conference.

Amid expectations the US Federal Reserve will adopt further easing measures to pump more liquidity into the world’s largest economy and further weaken the dollar, the unit Thursday plunged to fresh 15-year lows against the yen.

A surprise policy tightening move by Singaporean authorities to widen the trading band of its currency on Thursday also added to pressure on the greenback and pushed the Singaporean unit to record highs.

On Friday the dollar stood at 81.42 yen, little changed from 81.44 in New York Thursday, after the unit earlier plunged to a 15-year low of 80.89 yen.

 

Asia Slowdown to Have `Serious’ on Affect Europe, Economy Chief Rehn Says

Slower economic growth in China, India or other Asian economies would have a “serious negative impact” on Europe’s growth, the European Union’s economic chief said.

Olli Rehn, the EU commissioner for economic and monetary affairs, said yesterday in a Bloomberg Television interview that a slowdown in the U.S. recovery and turmoil in the sovereign debt markets also could cause concern in Europe.

Strengthening global growth helped Europe’s economy show the fastest expansion in four years in the second quarter after the Greek budget crisis earlier damped confidence in the euro currency and forced governments to step up deficit-cutting measures. Euro-area growth is likely to decelerate in the second half of the year as signs of a slowdown in the U.S. and China dim export prospects.

In the U.S., the world’s biggest economy, the Commerce Department may revise lower its second-quarter growth rate to the slowest since the recovery began, according to the median forecast of economists in a Bloomberg News survey. China’s expansion eased to 10.3 percent in the second quarter and industrial production cooled more than forecast in June, data showed last month, signaling a deeper second-half slowdown.

Household finance under pressure in August

http://www.bbc.co.uk/news/business-11053227

Household finances came under pressure on all fronts in August, according to market researchers Markit and YouGov.

Their survey of 2,000 households showed people were increasingly worried about losing their jobs and higher costs of living.

The Household Finance Index suggests individuals are feeling few benefits from the growing economy.

Some 30% of polled households said their finances had worsened, compared to 6% who said they had improved.

Nearly 69% of respondents reported a rise in the price of their goods and services in August from July, the highest level since the survey began 18 months ago.

Tim Moore, economist at Markit, said: “Stronger growth in the UK economy has done little to put a floor under the downturn in household finances.”

Vietnam Devalues Currency to Boost Exports as Stocks Approach Bear Market

http://www.bloomberg.com/news/2010-08-18/vietnam-devalues-currency-to-boost-exports-as-stocks-approach-bear-market.html

Vietnam devalued its currency for the third time since November, moving to reverse a slump in exports that helped to drive stocks close to a bear market.

The dong slid to a record-low 19,425 per dollar at 9:28 a.m. in Hanoi after the central bank lowered the reference rate by 2 percent to help control a trade deficit. The Ho Chi Minh City Stock Exchange’s VN Index dropped 1.6 percent to 455.96, extending its decline from the May peak to 17 percent, near the 20 percent that would indicate a bear market.

A weaker currency may boost exports and demonstrates the government’s focus on boosting economic growth over further easing inflation, said Prakriti Sofat, a Singapore-based economist at Barclays Capital. Prime Minister Nguyen Tan Dung said in June the economy may expand as much as 7 percent this year, beating the 6.5 percent target, from 5.3 percent in 2009.

“The main reason for the central bank’s move is to balance onshore foreign-exchange demand-and-supply and to support exporters,” Sofat said. “Vietnam largely exports low value- added goods and typically competes on prices.”

Peter Popham: Japan shows us the limits of growth

http://www.independent.co.uk/opinion/commentators/peter-popham-japan-shows-us-the-limits–of-growth-2054285.html

It’s finally happened: China’s economy has overtaken Japan’s. Less than 20 years after Deng Xiaoping told his people that “to get rich is glorious”, and three decades after the Chinese Communist Party began its first timid opening to the outside world, the Central Kingdom has surpassed its rival across the Sea of Japan. China is now officially the world’s number two and, unless something inconceivable happens, it will hold that place until it becomes number one, maybe as soon as 2030.

There are several reasons why Japan stopped growing after the crash. An ageing population, a shrinking birth rate and a national disinclination to admit millions of immigrants are among the obvious ones. But one reason economists tend to overlook is the following: with the Cold War coming to an end, Japan saw that, for the first time since the 1850s, there really was nothing to fear any more.

German economy surges 2.2% in quarter

http://edition.cnn.com/2010/BUSINESS/08/13/german.gdp.growth.ft/index.html?hpt=T2#fbid=5ottK_FOtpr&wom=false

Germany on Friday reasserted itself as the economic growth engine of the eurozone, after gross domestic product expanded at a stellar 2.2 percent rate in the second quarter compared with the previous three months.

The growth spurt experienced by Germany is partly due to one-off factors, such as pent-up demand from the winter season and the earlier economic recovery in its Asian and American export markets.

With consumer confidence still relatively low in Europe, there has been little sign so far of a pick up in domestic demand, which economists are looking for as a signal of a sustained recovery. But appetite for consumption is likely to be curtailed by fiscal tightening measures being unveiled in most eurozone member states.